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Big Banks Blink on New Card Fees

by Alexandra Zega

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A month after Bank of America got pummeled by consumers and politicians for introducing plans for new debit-card fees, most other big U.S. banks are steering clear of imposing similar charges.

Following eight months of consumer testing, J.P. Morgan Chase & Co. (JPM - News) has decided that it won't charge customers who use their debit cards to make purchases, according to a person familiar with the bank's plans. The New York bank's Chase retail unit is one of the largest U.S. consumer banks, with 26.5 million checking accounts and 5,300 branches.

J.P. Morgan joins U.S. Bancorp (USB - News), Citigroup Inc. (C - News), PNC Financial Services Group Inc. (PNC - News), KeyCorp (KEY - News) and other large banks that have said in recent days that they won't impose monthly fees on debit cards. None of those banks said they made their decisions because of the outcry over Bank of America's fees.

"We looked at all options and quickly decided it didn't fit with our overall strategy," said David Bowen, who runs the consumer-product business at Cleveland-based Key, which ranks among the 20 largest banks in the country.

Banks are loading fees onto customer accounts in an attempt to recover billions of dollars in revenue that will be lost from new restrictions on debit cards, credit cards and overdrafts. Most big banks have already eliminated free checking for customers who don't meet certain criteria on their accounts, such as minimum balances or a certain number of direct deposit transactions.

Bank of America Corp. (BAC - News) has begun laying plans to charge millions of customers $5 a month if they use their debit cards to make purchases. The bank is still working out details of its plans, which likely won't affect all customers, according to a person familiar with the situation. SunTrust Banks Inc. (STI - News), Atlanta, is also tacking a $5 monthly fee on some debit-card users, while Regions Financial Corp. (RF - News) of Birmingham, Ala. is charging $4 a month on some accounts.

Wells Fargo & Co. (WFC - News) is testing a $3 monthly debit-card fee in five states.

The debit-card fees stem from a provision in last year's Dodd-Frank financial-overhaul law that reduced by roughly half the amount that banks are permitted to charge merchants for debit-card transactions. Merchants had long complained that they were being charged too much to accept debit cards, which are typically used instead of cash and checks.

Banks are expected to lose more than $6 billion in annual revenue as a result of the new rules, according to industry estimates.

The debit-card fees have sparked an outcry among politicians—including members of Congress and President Obama—as well as customers, who have threatened to close their bank accounts and move to other institutions.

Community banks and credit unions are tapping into that fury by encouraging consumers to move to small institutions that don't charge such fees. Bethpage Federal Credit Union in New York, for example, said this week it signed up 1,500 customers—twice its normal rate—since Bank of America's plans became public.

Other big banks say they determined debit-card fees would cost them as well. "Our customers said that would be a massive source of irritation for them," said Stephen Troutner, Citigroup's head of consumer and small business banking. "Any time you hear that kind of emphatic feedback from customers, you've got to listen to them."

Many banks will likely increase charges in other areas to make up the lost revenue but some banks said they will focus on winning over more customers and convincing them to sign up for more financial products.

Todd Barnhart, head of retail products at Pittsburgh-based PNC, said debit cards are essentially an extension of checking accounts and that consumers don't view them as a separate product.

"I generally think customers don't want to be nickled and dimed," he said.

Indeed, consumers expressed relief that the debit-fee trend is not spreading widely.

"It's not about the money. It's about 'are you kidding me?'" said Amanda Peterson of San Francisco, who banks with U.S. Bancorp. She said she would have "immediately" switched banks if the Minneapolis-based lender had started charging for debit cards.

Chase was one of the first big banks to explore monthly fees on debit cards. The bank began testing monthly fees of $3 in Wisconsin and Georgia in February. Those tests are scheduled to end in mid-November and won't be renewed or expanded for now, said the person familiar with the bank's plans.

Sen. Richard Durbin (D., Ill.), who wrote the provision which reduced merchant debit-card fees, sent a letter to Wells Fargo Chief Executive John Stumpf last week complaining about the bank's new charges. "It is certainly surprising that your bank would pursue this fee strategy in light of the consumer reaction that has been prompted by Bank of America's recent imposition of a monthly debit fee on its customers. If you were hoping that your new fee would go unnoticed, it has not," he wrote.

In a statement, Wells Fargo said, "We regularly review our pricing and take into account the needs of our customers, industry trends, the market competition and our cost of doing business."

(c) Wall Street Journal - Robin Sidel - Suzanne Kapner contributed to this article

 

Obama offers mortgage relief on Western trip

by Alexandra Zega

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LAS VEGAS (AP) -- President Barack Obama offered mortgage relief on Monday to hundreds of thousands of Americans, his latest attempt to ease the economic and political fallout of a housing crisis that has bedeviled him as he seeks a second term.

"I'm here to say that we can't wait for an increasingly dysfunctional Congress to do its job," the president declared outside a family home in Las Vegas, the epicenter of foreclosures and joblessness. "Where they won't act, I will."

Making a case for his policies and a new effort to circumvent roadblocks put up by Republican lawmakers, Obama also laid out a theme for his re-election, saying that there's "no excuse for all the games and the gridlock that we've been seeing in Washington."

"People out here don't have a lot of time or a lot of patience for some of that nonsense that's been going on in Washington," he said.

The new rules for federally guaranteed loans represent a recognition that measures the administration has taken so far on housing have not worked as well as expected.

His jobs bill struggling in Congress, Obama tried a new catchphrase -- "We can't wait" -- to highlight his administrative initiatives and to shift blame to congressional Republicans for lack of action to boost employment and stimulate an economic recovery.

Later in the week, Obama plans to announce measures to make it easier for college graduates to pay back federal loans. Such executive action allows Obama to address economic ills and other domestic challenges in spite of Republican opposition to most of his proposals.

While Obama has proposed prodding the economy with payroll tax cuts and increased spending on public works and aid to states, he has yet to offer a wholesale overhaul of the nation's housing programs. Economists point to the burst housing bubble as the main culprit behind the 2008 financial crisis. Meanwhile, the combination of unemployment, depressed wages and mortgages that exceed house values has continued to put a strain on the economy.

While the White House tried to avoid predicting how many homeowners would benefit from the revamped refinancing program, the Federal Housing Finance Agency estimated an additional 1 million people would qualify. Moody's Analytics say the figure could be as high as 1.6 million.

Under Obama's proposal, homeowners who are still current on their mortgages would be able to refinance no matter how much their home value has dropped below what they still owe.

"Now, over the past two years, we've already taken some steps to help folks refinance their mortgages," Obama said, listing a series of measures. "But we can do more."

At the same time, Obama acknowledged that his latest proposal will not do all that's not needed to get the housing market back on its feet. "Given the magnitude of the housing bubble, and the huge inventory of unsold homes in places like Nevada, it will take time to solve these challenges," he said.

In spelling out the plan to homeowners in a diverse, working-class Las Vegas neighborhood, Obama chose a state that provides the starkest example of the toll the housing crisis has exacted from Americans. One in every 118 homes in the state of Nevada received a foreclosure notice in September, the highest ratio in the country, according to the foreclosure listing firm RealtyTrac.

Obama visited the home of Jose and Lissette Bonilla, two grocery store workers whose house was refurbished under a program paid for by the original 2009 economic stimulus plan. The program was designed to stabilize communities hit by foreclosures or abandonment. Lissette Bonilla said she told the president that without his stimulus plan, the five members of her family would still be living in a one-bedroom apartment.

Presidential spokesman Jay Carney criticized Republican presidential candidate Mitt Romney for proposing last week while in Las Vegas that the government not interfere with foreclosures. "Don't try to stop the foreclosure process," Romney told the Las Vegas Review-Journal. "Let it run its course and hit the bottom."

"That is not a solution," Carney told reporters on Air Force One. He said Romney would tell homeowners, "`You're on your own, tough luck.'"

The president also was using his visit to Las Vegas to promote a $15 billion neighborhood revitalization plan contained in his current jobs proposal that would help redevelop abandoned and foreclosed properties and stabilize affected neighborhoods.

The Nevada stop was the first leg of a three-day tour of Western states, blending his pitch for boosting the economy with an aggressive hunt for campaign cash.

From Nevada, Obama will head for the glamor of Hollywood and the homes of movie stars Melanie Griffith and Antonio Banderas and producer James Lassiter for some high-dollar fundraising. On Tuesday, he will tape an appearance on "The Tonight Show" with Jay Leno. He will also raise money in San Francisco and in Denver.

Before the president addressed his mortgage refinancing plan, he attended a fundraiser at the luxurious Bellagio hotel, offering a sharp contrast between well-to-do who are fueling his campaign and the struggling homeowners hoping to benefit from his policies.

The mortgage assistance plan by the Federal Housing Finance Agency will help borrowers with little or no equity in their homes, many of whom are stuck with 6 or 7 percent mortgage rates, to seek refinancing and take advantage of lower rates. The FHFA plans to remove caps that had allowed homeowners to refinance only if they owed up to 25 percent more than their homes are worth.

The refinancing program is being extended until the end of 2013. It was originally scheduled to end in June 2012.

The administration's incremental steps to help homeowners have prompted even the president's allies to demand more aggressive action.

Rep. Dennis Cardoza, a moderate Democrat from California, gave voice to Democratic frustration on the housing front last week when he announced his decision not to seek re-election, blaming the Obama administration directly for not addressing the crisis.

"I am dismayed by the administration's failure to understand and effectively address the current housing foreclosure crisis," Cardoza said in a statement that drew widespread attention. "Home foreclosures are destroying communities and crushing our economy, and the administration's inaction is infuriating."

Obama's new "We can't wait" slogan is his latest in a string of stump-speech refrains he hopes will pressure Republicans who oppose his $447 billion jobs package. He initially exhorted Congress to "Pass this bill!" then demanded "I want it back," all in the face of unanimous Republican opposition in the Senate, though even some Democrats were unhappy with the plan.

Obama has now agreed to break the proposal into its component parts and seek congressional approval one measure at a time. The overall proposal would increase taxes on millionaires, lower payroll taxes on workers and businesses for a year, pay for bridge, road and school construction projects, and help states and local governments retain teachers and emergency workers.

The proposals with the best chance of passage are the payroll tax cuts and extensions in jobless insurance to the long-term unemployed.

Countering Obama's criticism, GOP leaders say the sluggish economy and stubbornly high unemployment rate are the result of failed Obama administration policies.

"It's another day in the campaign life of President Obama, and he's bringing his re-election tour to Nevada, ground zero for the damaging effects of his failed economic policies," Republican National Committee Chairman Reince Priebus said Monday.

 

10 Fantastic Towns for Fall

by Alexandra Zega

(c) Christine Sarkis

 

 

 

 

Fall is a time to slow down and enjoy the scenery, and small towns know a thing or two about embracing a slower pace of life. To help you make the most of the season, we've scoured the country to find 10 towns that deliver exceptional fall foliage.


Our top picks might have all weighed in with populations under 10,000, but all offer big reasons to visit.

Jim Thorpe, Pennsylvania

During autumn in Jim Thorpe, a trip down memory lane is framed by brightly colored leaves. The historic town, tucked into a steep valley in the Poconos, offers wonderfully preserved buildings that house tea rooms, art galleries, and an old opera house popular on the Vaudeville circuit. Fall foliage weekends complete with arts, crafts, music, and kids' activities run throughout October, and this time of year also brings guided ghost walks to town. 

Time it Right: October is prime time for both foliage and fall activities. This year, the projected peak of color is around October 12, but Alicia Quinn at the Pocono Mountains Visitors Bureau notes, "if history repeats itself, this will get pushed back until mid-month, and usually lasts about two weeks." 

 

Sedona, Arizona

There's nothing understated about Sedona, about two hours north of Phoenix in the high desert of Central Arizona. Vibrant red mesas and blushing sandstone cliffs offer some of the country's most spectacular scenery, especially at sunrise and sunset. During fall, the color show takes it up a notch. In town you can browse art galleries—or get your energy balanced by one of the many healers and spiritual guides that call Sedona home—before heading out for some leaf peeping. 

Time it Right: Ellen Bilbrey of Arizona State Parks says that fall foliage colors will likely start to appear in mid-October this year, but warns, "We never know the actual peak time until the weather starts to drop to temperatures of 45 degrees at night." 

 

Stockholm, Wisconsin

The village of Stockholm, on the banks of the Mississippi River about 70 miles from Minneapolis, offers dozens of delightful ways to savor fall. Vast swaths of fall foliage adorn the landscape around the town, the local pie company bakes up fall in many flavors, and at the Maiden Rock Winery and Cidery, you can drink the season too, with wines made from apples and berries. And if that's not enough, you can tool around town on free blue bikes available for visitors or take advantage of some of the best boutique and antique shopping in the state. 

Time it Right: This year, TravelWisconsin's fall color report predicts peak fall color in mid-October. 

 

Woodstock, Vermont

In Woodstock the most wonderful time of the year comes early. With fall foliage that's nothing short of spectacular, the town and surrounding countryside put on a color show that draws visitors from around the world. Weekend events include harvest suppers, the Woodstock Apples and Crafts Fair, and the nearby Antique Show. Before you head out of town in search of the brightest reds and oranges of autumn, spend some time roaming the quaint downtown or exploring Vermont's rural heritage at the nearby Billings Farm & Museum. 

Time it Right: The leaves have already started to change in Woodstock. Rain and wind dependant, peak season should fall between October 1 and October 10 to 15. 

 

Jasper, Arkansas

Each fall, the tiny Ozark mountain town of Jasper beckons visitors with the promise of vivid fall colors and Southern hospitality. Start the warm fall days with a big breakfast at a local cafe or by people-watching in the downtown square before heading out for some serious leaf peeping, wildlife spotting, and scenic drives. 

Time it Right: The best time to see the fall colors near Jasper is usually between October 15 and November 15. You can stay up to Sdate on fall foliage around the state by checking the Arkansas Department of Parks and Tourism website. 

 

Hood River, Oregon

Colorful fall foliage and abundant harvests. That's what you'll get in and around Hood River, a town nestled in the Columbia River Gorge next to the Cascade Mountain Range. Plan your stay for the first weekend of any month and you'll get to enjoy First Friday, when art galleries, shops, and restaurants downtown put on an evening of new art exhibits, wine tastings, and free music between 6 and 9 p.m. October brings many fall festivities, including the Hood River Valley Harvest Fest and the Heirloom Apple Celebration. 

Time it Right: Because summer has lingered this year, peak foliage likely won't arrive until early- to mid-October. 

 

 Stockbridge, Massachusetts

The small town of Stockbridge in the Berkshires has some pretty high praise to its name. Norman Rockwell called it "the best of America, the best of New England." In fall, surrounded by some of the country's most dazzling displays of fall foliage, it truly earns its high marks. The town and its environs aren't just rich in fall color; area attractions include the MASS MoCA, the Norman Rockwell Museum, the Colonial-era Mission House, the frontier re-creation Bidwell House Museum, and The Mount, Edith Wharton's Estate and Gardens. 

Time it Right: Berkshire Leaf Chief Lauren Stevens says that while the leaves begin to turn before the official start of fall on September 23, they "typically reach their crescendo in October."

Fayetteville, West Virginia 

Small-town appeal comes in many packages, and Fayetteville prefers its charm funky and cool rather than just quaint. In town, little restaurants serve up local microbrews and local specialties (check out the grape pizza at Pies & Pints). Just outside town, the New River Gorge offers some of the best fall foliage in the state. It's also a focal point for adventure seekers: Whitewater rafting, hiking, mountain biking, and BASE jumping are popular activities. In fact, October 15 is New River Gorge Bridge Day, when thousands come together to celebrate fall and watch some serious BASE jumping (think tall bridge and parachutes). 

Time it Right: Fayetteville usually sees peak color in late October. The West Virginia Division of Forestry publishes a weekly update on the latest fall foliage around the state. 

 Munising, Michigan

Gorgeous fall foliage has good company in the Upper Peninsula town of Munising. With dramatic sandstone cliffs rising above Lake Superior and 17 local waterfalls, the stage for beauty is already set by the time the dramatic reds, oranges, and yellows of autumn take hold of the forests. Take a stroll downtown, admire the work of local artists, and feast on fresh fish from the lake or sink your teeth into pasties, the local specialty. 

Time it Right: Peak colors in the area occur from late September to mid-October. You can check out the latest fall colors on ExploreMunising.com. 

Julian, California

Julian offers fall colors where you'd least expect them: in Southern California, about an hour from San Diego. This former gold-rush town in the Cuyamaca Mountains still shines bright each autumn. The town is also known for its apple season and draws leaf peepers looking for a side of apple pie and cider donuts. The Julian Apple Days Festival occurs the first weekend in October this year. 

Time it Right: September and October see the changing of the leaves, and promise plenty of apple treats.


 

Is It Time to Ditch Your Debit Card?

by Alexandra Zega

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What's the least-friendly piece of plastic in your wallet? With Bank of America's recent announcement that it will start charging for debit card use, upset customers might say there's a strong argument it's the debit card — and increasingly, there are better alternatives.

The change in debit card terms has been gradual. Most recently, Bank of America announced its plans to levy a $5 monthly fee for making debit-card purchases starting next year. Banks including Wells Fargo, SunTrust and Chase have already eliminated debit rewards programs, and Chase, PNC and TD Bank are testing ATM fees as high as $5 a pop in some markets.

Given the rising costs, consumers may be better off without debit cards at all, says Dennis Moroney, senior analyst covering bank cards at TowerGroup consulting firm. "I never understood why people wanted debit cards in the first place," he says.

Credit cards can often be a better fit. Consumers who pay off their balances in full avoid expensive interest charges and fees, often while earning rewards of 1% or better. And as recent data breaches have highlighted, credit cards offer better protections than debit cards in the case of fraud or theft. (When debit cards are stolen, consumers risk losing everything in their checking account if they don't report the theft before the card is used.)

Banks are also expected to start pushing prepaid cards as a debit alternative, says Odysseas Papadimitriou, chief executive at credit-card comparison web site CardHub.com. American Express became the first major bank to introduce one earlier this year. Of course, most of these cards aren't free either. Users with the American Express prepaid card get one free ATM withdrawal each month, then pay $2 for each one thereafter — in addition to any fees the ATM's owner might charge. The Green Dot Gold Prepaid Visa card may seem closer to a traditional debit card: For someone who signs up for direct monthly deposits of at least $2,000 and visits the ATM at least once a week, the card levies no additional fees, according to CardHub.com.

Remember cash? No fees or fine print, and more businesses are offering discounts for shoppers who use it. Of course, if it's stolen, there's no way to recover it. So even consumers who go cash-only should maintain a checking account with ATMs convenient to work and home, says Richard Barrington, an analyst at MoneyRates.com, which tracks bank rates.

For anyone who still really wants a debit card, smaller banks and credit unions may be the best alternatives. At online bank PerkStreet, for example, customers can earn up to 2% cash back on their debit purchases, as well as 5% on specific categories, like housing or dining, that change each month. (The bank has 37,000 ATMs throughout the country.) At Sovereign Bank, debit card holders get up to 20% cash back on purchases at more than 1,200 retailers, including Restaurant.com, TurboTax and Brookstone, which is then credited to their checking account.

Readers, would you pay $60 per year to use your debit card?

Displaying blog entries 1-4 of 4

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